THE recent move of the People’s Bank of China (PBOC)—China’s central monetary authority—to surprise markets with a rate cut could prove to be positive for the Philippine economy, the Bangko Sentral ng Pilipinas (BSP) said.
Sought for a reaction on China’s recent rate cut, central bank Governor Amando M. Tetangco Jr. said the BSP includes the policy actions of advance economies and other major trading partners in its overall assessment of the BSP’s operating environment.
“With China’s action, to the extent this will result in sustaining growth in the Chinese economy. This should be positive for our growth prospects in the medium term,” Tetangco said.
In its most recent statement in the official web site, the PBOC decided to cut its benchmark loan and deposit-interest rates by 0.4 percentage points, to 5.6 percent and by 0.25 percentage points for its deposit interest rates.
Tetangco further said the policy pronouncements in China, as well as the pronouncements in the European Central Bank, will make market players realize that it is time to add risk to their portfolios.
“We will continue to closely monitor the impact of the Chinese action on overall market-risk appetite going forward,” Tetangco said.
The BSP will be hold its own policy meeting on December 11. This will be the BSP’s last meeting for the year.
In a separate research note, regional banking giant ING Bank said the BSP will likely continue to pause measures in its December meeting.
“The BSP outlook depends on favorable inflation reports and tendencies. We expect a decision to extend the pause now that
inflation pressures are easing,” the ING Bank said.
The ING Bank said the central bank will likely increase its own rate hike by the third quarter of 2015.